The Bush administration said Friday it won't reconsider its approval for a United Arab Emirates company to take over significant operations at six U.S. ports. The former head of the Sept. 11 commission said the deal "never should have happened."
Opponents, including the agency that runs New York and New Jersey ports, took their case to court, while the company, Dubai Ports World, stepped up efforts to change the minds of congressional critics.
The president's national security adviser said the White House would keep trying to persuade lawmakers. There's more time since the company offered to delay its takeover, but the administration wouldn't reconsider its approval.
"There are questions raised in the Congress, and what this delay allows is for those questions to be addressed on the Hill," Stephen Hadley said. "There's nothing to reopen."
As CBS News correspondent Lee Cowan reports, Congressman Ted Poe, R-Texas, is one of the lawmakers raising questions. He is concerned the deal would expose the world's second largest port, located in Beaumont, Texas, to a security risk.
Since one third of the U.S. Army's equipment deployed to Iraq and Afghanistan is shipped from the Beaumont port, there is growing concern there that if the takeover goes through, those who know what the Army put on board, and where it is going, would be employed by a company owned by Dubai.
"Right in the middle of homeland security issues, a port that deals in military cargo, having them [Dubai employees] have that information, doesn't seem like that's very smart," Representative Ted Poe, R-Beaumont tells Cowan.
The Army insists the port's security will not be turned over to a foreign company, and that the protections in place before will remain regardless of ownership.
Thomas Kean, a former Republican governor of New Jersey who led the bipartisan probe of the Sept. 11 attacks, said the deal was a big mistake because of past connections between the 2001 hijackers and the UAE.
"It shouldn't have happened, it never should have happened," Kean said in a telephone interview with The Associated Press.
The quicker the Bush administration can get out of the deal, the better, he said. "There's no question that two of the 9/11 hijackers came from there and money was laundered through there," Kean said.
Kean acknowledged the UAE is now being helpful by allowing the United States to dock ships in its country's waters and helping the U.S. with intelligence.
"From our point of view, we don't want foreigners controlling our ports," Kean said. "From their point of view, this is a legitimate company that had a legitimate bid and won, and here are all these congressmen saying all these things about not wanting this company. It looks to them like it's anti-Arab."
"I think this deal is going to be killed," Kean said. "The question is how much damage is this going to do to us before it's killed."
Kean's comments threatened to overshadow moves by the company and the White House to appease critics by delaying the takeover.
"Governor Kean knows as much as anyone how risky it is to deal with the United Arab Emirates," said Rep. Peter King, R-N.Y., chairman of the House Homeland Security Committee and a leading opponent of the deal. "This just proves that no real investigation was ever conducted, and it's unfortunate that he and the other 9/11 commissioners were not contacted before the government approved this."
The former head of the CIA's Osama bin Laden unit joined in the criticism.
"The fact that you are putting a company in place that could already be infiltrated by al Qaeda is a silly thing to do," said Mike Scheuer, who headed the CIA unit until 1999.
The U.S. operations generating the protests represent about 10 percent of a global $6.8 billion acquisition by the state-run company.
Republicans and Democrats in Congress have denounced the Bush administration for approving the deal through a secretive review process designed to protect national security in big corporate mergers.
Lawmakers led by King and Sen. Charles Schumer, D-N.Y., plan to introduce legislation next week that would put the deal on hold while the government conducts further investigation.
Hoping to forestall such legislation, Dubai Ports said Thursday night it would postpone its action indefinitely to give Congress more time to look at the deal.
Said Bush Press Secretary Scott McClellan: "We believe once Congress has a better understanding of the facts and the safeguards that are in place that they will be more comfortable with the transaction moving forward. So, a slight delay would be helpful in that regard,"
"A delay makes sense to give the Congress and the American public a chance to gather information on the implications of the sale and to sort out the issues," says former staff member of the House International Relations Committee and CBS News foreign affairs analyst Pamela Falk.
The delay came after a very public nudge from White House counselor Karl Rove, who said that the president wouldn't mind if the deal were delayed in taking effect, CBS News senior White House correspondent Bill Plante reports.
Sen. Pete Domenici, R-N.M., said much of the criticism has an anti-Arab bias.
"We are at war against terrorists, not any religion or ethnicity. Some politicians seem to have forgotten that. ... Such alarm, verging almost on hysteria, harms our efforts to have the broadest coalition possible against worldwide terrorism," Domenici said.
House GOP leaders plan to meet Tuesday to decide whether they will still support immediate legislation to hold up the sale.
Rep. Thomas Reynolds, a member of the leadership, said he is "beginning to get what I want, which is to slow down this process so we can take a look at it."
Lobbyists for Dubai Ports went to Capitol Hill on Friday to brief staffers. Lawmakers said the company's delay was a positive step, but not a solution.
"I think the onus still remains with the company and for those who approved it, to justify how this is consistent with our national security concerns," said Rep. Vito Fossella, R-N.Y.
In New Jersey, the agency in charge of area ports sued to try to block Dubai Ports from taking over operations there.
The Port Authority of New York and New Jersey argued in court papers that Dubai Ports World was violating its lease by not getting consent for its pending acquisition of the current port operator, London-based Peninsular & Oriental Steam Navigation Co.
New Jersey Gov. Jon Corzine, who is also suing over the sale, urged other governors to join the case.
Governors of Maryland, New York, and Pennsylvania have expressed concerns about the takeover; Florida Gov. Jeb Bush has said he trusts his brother the president on such security issues.